Housing Allowance for Cell Phone Bills
Can a pastor's housing allowance be applied to cell phone bills?

Q: Can our pastor use his housing allowance to pay for his cell phone bills?

A: Unfortunately, the tax code and regulations do not answer this question, and it has never been addressed by either the IRS or any court. So, a definitive answer is not possible.

In a 1955 ruling, the IRS concluded that telephone expenses are a utility expense to which a housing allowance can be applied. Letter Ruling 5509169250A. While this ruling was a private letter ruling that cannot be cited as precedent in other cases, it remains the only instance in which the IRS has addressed the application of housing allowance to telephone expenses.

This ruling makes sense. Section 107 of the tax code provides that the portion of a minister's church compensation that is designated as a housing allowance is not included in computing taxable income (for income tax reporting) to the extent that it is used to pay for housing-related expenses and, for ministers who own or rent their homes, does not exceed their home's annual fair rental value.

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Posted: January 1, 2010
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